Ancient Civilizations (circa 3000 BCE – 1000 BCE)

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Ancient China: One of the earliest forms of risk management can be traced to ancient China, where merchants would pool their resources together to protect against losses caused by piracy or natural disasters. If one merchant’s goods were lost, the others would contribute to covering the loss, effectively acting as a precursor to modern insurance.
Babylonian Empire: The ancient Babylonians (around 1700 BCE) developed one of the earliest known forms of insurance in the form of a “bottomry contract.” This was an agreement where a ship owner could borrow money to finance a trade venture, with the loan being repaid with interest only if the ship completed its voyage successfully. If the ship was lost, the loan was forgiven. This was a way of spreading the financial risk of sea voyages.
Ancient Rome: Roman law developed contracts known as “fides” (trust) that involved sharing risk among merchants, particularly for goods transported over long distances. These early forms of mutual aid resemble the idea of modern commercial insurance.

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